The Shariah clearly describes the efficient and effectve conduct of Islamic for-profit and not-for- profit organization as being encompassed within the concept of ihsaan (excellence). When organization seeks to incorporate Islamic values into their modus operandi, they resort to the Shari'ah's guidelines. However, the Shari'ah does not enunciate operationally how an organizationis to achieve sustainable competitive advantage in a highly turbulent, hyper competitive environment.

Overall, the strategic conduct of any Islamic business can be segmented into two areas. Shari' and Tabee' As Rosly indicates, “The Tabi' principles (i.e. the rational and empirical- an aspect of dunya (the world) relate to the mundane where man applies reason and experience to run his daily business, while the Shari' principles (i.e. Allaah's Command) convey the Divine rules that man must observe (while) doing the same. Both shall remain inseparable. The rational and empirical are driven by the spiritual values of the Qur'an. 

Since the Shari' principles are derived from the Qur'an and the Sunnah, they are common in all aspects of business transactions: Islaamic banking, treatment of employees, conduct of partnerships and so on. These principles originating from Allaah separate the halaal (lawful) from the haraam (forbidden) and are intended to foster justice ('adalah) in business transactions. When those engaged in business behave according to the Shari'ah principles, they are fulfilling the akhirah's (Hereafter) requirements of the Islamic worldview.

While the Shari'ah's principles describe how Islamic transactions are to be conducted in a just and equitable manner, other dimensions of market activity need not depend on explicit divine guidance. This is the Tabi' (natural) aspect of market activities that defines efficiency and therefore, performance. It is nature's way. Tabi's values, which are universal, can be used by all people, irrespective of faith and belief.

For example, a company can increase output by reducing per unit costs. In economics and manufacturing, this process is known as achieving economies of scale. To increase sales, a business should first conduct market research. To manage a complex multi-billion dollar project, it should use such project management techniques as PERT (Program Evaluation Review Technique). The Tabi’ aspect of a business annot be ignored, even when it runs under an Islamic label, for both Muslims and non-Muslims are expected to obey it. Its use is not so much about faith (eeman) as it is about efficiency and competence - although ethics (akhlaq) always apply to Muslims' conduct.

Thus, when mapping out a strategy, one notices that the Shari'ah does not describe the strategic management process and its associated techniques, and that Shari'ah scholars are not trained to be strategy experts. They can only help business people keep the halaal distinct from the haraam based on the Qur'anic injunctions.

Consider the case of Islamic financial planning. After screening for halaal and haraam investment instruments and area, the tabi' aspects become dominant process criteria in terms of the price-earnings ratio, return on investment, earnings per share, and other financial performance measures.

Similarly, as an organization seeks to develop and implement its strategy using tabi' principles, it must always make sure that it observes shari' principles. As Rosly stresses, "knowledge derived from non-divine sources (i.e.human) cannot be downgraded as ungodly, for the 'aql (reason) is also divine in nature. Humanity can discover Allaah by thinking about and contemplating His Signs. The aql is a powerful instrument to explain the nature and, therefore, the greatness of Allaah. However, if it is deprived of divine guidance, it becomes short-sighted and unable to produce credible tabi' principles for humanity's enjoyment."


This article was culled from the publications of Deen Communication Limited
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